9 May 2023

Let's Explore Group PLC

(the "Company" or the "Group")

Proposed Tender Offer to purchase up to 282,953,968 Shares at a Tender Price of 4.75 pence per Share and Notice of General Meeting

As previously referenced, most recently within the Company's 2022 Final Results announcement published on 4 May 2023, Let's Explore Group PLC is pleased to announce that a circular (the "Circular") will be sent to Shareholders later today detailing a Tender Offer for up to a maximum of 282,953,968 Shares representing approximately 65 per cent. of the Company's expected share capital on the Record Date at the Tender Price of 4.75 pence per Share.

In addition, the Circular sets out short-term Loan Agreements that the Company has entered into with three Directors of the Company, Martin Higginson, David Marks and Daniel Wortley, to allow each of them to exercise their respective Director Options in full.  The provision of the each of the Loans has been approved by the Board (with each of David Marks, Daniel Wortley and Martin Higginson abstaining from approving their own Loans) and will require the approval of Shareholders at the General Meeting.

Unless otherwise stated, terms used in this announcement have the same meanings as given to them in Part II of the Circular and in the Definitions set out below.

The Circular sets out the terms of the Loan Agreements and Tender Offer and incorporates a notice of a General Meeting to be held at 10 a.m. on 26 May 2023 at the offices of Cenkos at 6-8 Tokenhouse Yard, London EC2R 7AS. A Tender Form for use by Shareholders who hold their Shares in certificated form in connection with the Tender Offer is also being despatched with the Circular.

The information communicated in this announcement contains inside information for the purposes of Article 7 of the UK version of the EU Market Abuse Regulation (2014/596) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended and supplemented from time to time.

Enquiries:

For further information please visit www.letsexploregroup.com/, or contact:

1.       Introduction

This announcement sets out the background to and reasons for the Tender Offer to purchase Shares and why the Board believes the Tender Offer to be in the best interests of Shareholders as a whole as well as the background and reasons for the Loan Agreements and why the Board believes each of them to be in the best interests of the Shareholders as a whole.

The Tender Offer is being made available to all Eligible Shareholders who are on the Register on the Record Date, with the exception of holders in certain overseas jurisdictions.   Shareholders can decide whether they want to tender their Basic Entitlement, some of their Basic Entitlement or none of their Shares at a fixed price of 4.75 pence per Share representing a premium of 28.4 per cent. to the closing price of 3.7 pence per share on the Last Practicable Date.

The Tender Offer is being made by Cenkos as principal (and not as agent, nominee or trustee) on the basis that all Shares that it buys under the Tender Offer will be subsequently purchased from it by the Company pursuant to the terms of the Put/Call Option Agreement.

The Board is making no recommendation to Eligible Shareholders in relation to their participation in the Tender Offer.   However, Shareholders should note that the members of the Concert Party (including the Directors) which represents approximately 106,137,532 Shares (24.38%) of the issued share capital[1] have undertaken to the Company to tender their Basic Entitlements for participation in the Tender Offer to ensure that their respective percentage holding in the Company's issued share capital will not increase following the Tender Offer. The Board is unanimously recommending Shareholders to vote in favour of the Resolutions to be proposed at the General Meeting, as the Directors intend to do in respect of their own beneficial holding of Shares.

The General Meeting that will be held at the offices of Cenkos at 6-8 Tokenhouse Yard, London EC2R 7AS at 10 a.m. on 26 May 2023 is to consider the Resolutions that will be put to Shareholders.

Shareholders should note that, unless the On-Market Buy Back Resolution is approved at the General Meeting the Tender Offer will not take place. If any of the DM Resolution, the DW Resolution or the MH Resolution is not approved then the Company will not be able to provide, the DM Loan, the DW Loan or the MH Loan respectively.

2.   Background to the Tender Offer

On 1 March 2023, the Company announced that the LBE Sale had completed and the intention to return up to £12.5m to shareholders via a tender offer process.

It is anticipated that the Capital Reduction will become effective on or around 9 May 2023. Companies House currently has a backlog of filings that need to be registered and this is now the earliest date that they have advised that the Capital Reduction will become effective.

Following the LBE Sale and as stated in the final results for the year ended 31 December 2022, the Company now has a strong balance sheet with circa £19m of cash on hand and a further $1.25m plus interest due to be received from the buyer of the LBE business in February 2024. 

The Directors believe that following completion of the Tender Offer, the Company will be well placed to pursue new opportunities.

The Company has retained the home based entertainment (HBE) division, encompassing both the Let's Explore and Vodiac products, and will seek to take advantage of the strong trading over the strong seasonal periods whilst not over-committing Group cash resources to stock buying.

However, the main focus over the coming months with the Tender Offer completed, will be to find a suitable opportunity for the Group, which the Directors expect to become the Group's principal activity.  The Directors believe that the Company's AIM listing, experienced management team and cash resources  could be attractive to a growing business in need of development capital, especially whilst the equity markets remain challenging.

3.   The Tender Offer

Full details of the Tender Offer, including the terms and conditions on which it is being made, are set out in Part VI of the Circular and, in relation to Eligible Shareholders holding Shares in a certificated form, on the Tender Form to be sent to Eligible Shareholders who hold their Shares in certificated form.

The Tender Offer is conditional upon the satisfaction of the Conditions specified in Part VI of the Circular.

The Tender Offer involves the following:

·   The Tender Offer is being made to Eligible Shareholders (other than certain Overseas Shareholders) by Cenkos for the purchase of the Tender Offer Shares.   Under the Tender Offer, each Eligible Shareholder is entitled to have their shareholding purchased by Cenkos at the Tender Price (4.75 pence per Share) up to that Eligible Shareholder's Basic Entitlement.

·      The Tender Offer is being made at a premium of 28.4 per cent. to the closing price of 3.7 pence per share on the Last Practicable Date.

·      Eligible Shareholders (other than certain Overseas Shareholders) will be able to decide to tender their Basic Entitlement, some of their Basic Entitlement or none of their Shares within the overall limits of the Tender Offer.

·      All Shares validly tendered by any Eligible Shareholder up to their Basic Entitlement will be accepted in full.

·      Eligible Shareholders who hold their Shares in certificated form will each receive a personalised Tender Form which will include that Shareholder's Basic Entitlement calculated by the Registrars. If Eligible Shareholders wish to tender a different number of Shares to their Basic Entitlement, insert such number of Shares in the spaces provided on the Tender Form (Box 1b).

·      Eligible Shareholders who hold their Shares in uncertificated form (i.e. in CREST) and who wish to tender their Basic Entitlement should send a TTE Instruction through CREST to the member account set out in paragraph 3.3 of Part VI of the Circular.   The Receiving Agent will calculate Eligible Shareholders' Basic Entitlement on the Record Date and return any excess Shares.   If Eligible Shareholders wish to tender a different number of Shares up to their Basic Entitlement, they should send a TTE Instruction through CREST to the same member account specifying such number of Shares that they wish to tender.

·      The Tender Offer is subject to the Conditions set out in Part VI of the Circular being fulfilled.   Following completion of the Tender Offer, the Company's issued share capital will be reduced to 152,359,829 Shares, assuming the Tender Offer is taken up in full[2].

·      All successfully tendered Shares purchased by Cenkos will be purchased from Cenkos by the Company pursuant to the terms of the Put/Call Option Agreement and will be immediately cancelled and will not rank for any future dividends.

·      There is no guarantee that the Tender Offer will take place.  The Tender Offer will not proceed if any of the Conditions are not satisfied or if it is withdrawn in accordance with its terms by the Company at any point prior to the announcement of the results of the Tender Offer.  The non-fulfilment of the any of the Conditions would mean that the Tender Offer could not be implemented and that the Company would have to bear the abortive costs of making the Tender Offer.

·      All rights of Eligible Shareholders who choose not to tender their Shares will be unaffected, however, the reduction in the Company's issued share capital may result in a reduction in the liquidity of the Shares on the secondary market.

4.       The Concert Party and Takeover Code

As a public company which has its registered office or place of management and control in the UK, the Company is subject to the Takeover Code.

Under Rule 9 of the Takeover Code, any person who acquires, whether by a series of transactions over a period of time or not, an interest in shares (as defined in the Takeover Code) which when taken together with shares already held by him/her or held or acquired by persons acting in concert with him/her, carry 30% or more of the voting rights of a company which is subject to the Takeover Code or is interested in 30% or more but does not hold more than 50% of the shares carrying voting rights of such a company and acquires an interest in any additional shares carrying voting rights of that company, is normally required to make a general cash offer to all the remaining shareholders of the company to acquire their equity shares and transferable securities carrying voting rights in the company. An offer under Rule 9 of the Takeover Code must be in cash at the highest price paid by the person or the group of persons acting in concert in the preceding 12 months.

Under Rule 37.1 of the Takeover Code, when a company purchases its own voting shares, a resulting increase in the percentage of shares carrying voting rights in which a person or group or person acting, or presumed to be acting, in concert is interested will be treated as an acquisition for the purpose of Rule 9.   A shareholder not acting in concert with the directors will not normally incur an obligation to make a general offer under Rule 9 if, as a result of the purchase of its own shares by a company, they come to exceed the percentage limits set out in Rule 9.   However, this exception will not normally apply when a shareholder (or any relevant member of a group of persons acting in concert) not acting, or presumed to be acting, in concert with any one or more of the directors has acquired an interest in shares at a time when he had reason to believe that such a purchase of its own shares by the company would take place.

If any member of the Concert Party does not tender their Basic Entitlement in the Tender Offer, the holding of the Concert Party would increase beyond the interest they currently have of 22.58% of the Voting Share Capital. Therefore to remove the risk that the Concert Party may need to make an offer under Rule 9 of the Takeover Code, each member of the Concert Party except one Shareholder, who holds 37,749 Shares representing 0.01 per cent. of the Voting Share Capital, has undertaken to tender their Basic Entitlements in the Tender Offer.

The Panel have confirmed to the Company that if any member(s) of the Concert Party do not participate in the Tender Offer to the extent of their Basic Entitlements and the holding of the Concert Party rises above 30% of the Voting Share Capital then the member(s) of the Concert Party who did not participate would be obligated to make a mandatory offer under Rule 9 of the Takeover Code at the highest price that Shares have been bought by any Concert Party member in the previous 12 months. The obligation to make a mandatory offer under Rule 9 of the Takeover Code would also fall on any party the Panel considered or deemed to be a leader of the Concert Party.

Cenkos will purchase, as principal (and not as agent, nominee or trustee), Shares under the Tender Offer which could result in Cenkos acquiring an interest in Shares carrying 50 per cent. or more of the Voting Share Capital.   Promptly following such purchase, under the terms of the Put/Call Option Agreement, Cenkos will sell all the Exit Shares to the Company and the Company will buy and thereafter cancel all such Shares.

The Panel on Takeovers and Mergers have confirmed that Cenkos will not be required to make a mandatory offer pursuant to Rule 9 of the Takeover Code in respect of the of the Shares purchased by Cenkos under the Tender Offer.

5.       Loans

Following the LBE Sale and the significant change to the composition of the Company, going forward the Board believes the current outstanding option arrangements are no longer appropriate.  Accordingly, it is proposed that the holders of the outstanding options should exercise these options and tender the resulting Shares into the Tender Offer.

In order to facilitate this process, the Company is proposing to lend to David Marks, Daniel Wortley and Martin Higginson, all directors of the Company, the DM Loan, the DW Loan and the MH Loan, respectively to allow each of them to exercise the DM Options, the DW Options and the MH Options, as appropriate. This will allow each of them to sell the Shares, pro rata, granted by the DM Options, the DW Options and the MH Options pursuant into the Tender Offer. Each of the Loans will be repaid out of the proceeds each of David Marks, Daniel Wortley and Martin Higginson receives from the Tender Offer.

On 5 May 2023, the Company entered into each of the DM Loan Agreement, the DW Loan Agreement and the MH Loan Agreement, conditional on passing of the DM Loan Resolution, the DW Loan Resolution and the MH Resolution and the provision of the each of the Loans has been approved by the Board (with each of David Marks, Daniel Wortley and Martin Higginson abstaining from approving their own Loans) and will require the approval of Shareholders at the General Meeting. Each of the Option Directors will exercise their respective Director Options in full and will tender their full pro rata entitlement (being 65%) of such new Shares into the Tender Offer.   The proceeds will be used to repay the Loans and any taxation arising on the exercise of the Director Options.

However, pursuant to the CA 2006, unless a transaction has been approved by the members of the Company, the Company may not make a loan to a director hence the requirement to seek Shareholder approval for these loans.

A summary of each of the Loan Agreements is set out below:

DM Loan Agreement

The DM Loan Agreement provides that the Company will lend to David Marks the DM Loan of £260,932.43 for the sole purpose of exercising the DM Options, conditional upon Shareholders passing the DM Loan Resolution. Interest is to be paid on the DM Loan at the rate of 8% per annum and will be paid along with the DM Loan on the earlier of the settlement of the Tender Offer proceeds and 30 June 2023 and otherwise on demand by the Company. The DM Loan is unsecured.

DW Loan Agreement

The DW Loan Agreement provides that the Company will lend to Daniel Wortley the DW Loan of £94,884.50 for the sole purpose of exercising the DW Options, conditional upon Shareholders passing the DW Loan Resolution. Interest is to be paid on the DW Loan at the rate of 8% per annum and will be paid along with the DW Loan on the earlier of the settlement of the Tender Offer proceeds and 30 June 2023 and otherwise on demand by the Company. The DW Loan is unsecured.

MH Loan Agreement

The MH Loan Agreement provides that the Company will lend to Martin Higginson the MH Loan of £403,259.23 for the sole purpose of exercising the MH Options, conditional upon Shareholders passing the MH Loan Resolution. Interest is to be paid on the MH Loan at the rate of 8% per annum and will be paid along with the MH Loan on the earlier of the settlement of the Tender Offer proceeds and 30 June 2023 and otherwise on demand by the Company. The MH Loan is unsecured.

Memoranda for each of the Loan Agreements containing details of the nature of the transaction, the amount of each Loan, the purpose for which it is required and the extent of the Company's liability under the Loan Agreements will be available for inspection at Cumberland Court 80 Mount Street Nottingham NG1 6HH for a period of not less than 15 days ending with the date of the General Meeting.

The Company is seeking approval of the Loan Resolutions, without which the Loans cannot be made.

6.       UK Taxation

Eligible Shareholders who sell Shares pursuant to the Tender Offer should be treated as having sold their Shares in the normal way.  Shareholders may, depending on their individual circumstances, incur a liability to taxation on capital gains.   Shareholders benefitting from EIS tax relief who have held their Shares for less than three years may be subject to EIS tax relief clawback whether they participate in the Tender Offer or not. Further information on certain UK taxation consequences of the Tender Offer is set out in Part VII of the Circular.

Eligible Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the UK should consult an appropriate professional adviser.

7.       Overseas Shareholders

Eligible Shareholders with registered or mailing addresses outside the UK, or who are citizens or nationals of, or resident in, a jurisdiction other than the UK, should read paragraph 9 of Part VI of the Circular and the relevant provisions of the Tender Form.   It is the responsibility of all Overseas Shareholders to satisfy themselves as to the observance of any legal requirements in their jurisdiction, including, without limitation, any relevant requirements in relation to the ability of such holders to complete and return a Tender Form.

8.   Put/Call Option Agreement

The Company and Cenkos entered into a conditional Put/Call Option Agreement on 5 May 2023 granting put and call options in respect of the Shares purchased by Cenkos pursuant to the Tender Offer.  Pursuant to the exercise of either option, the Company will purchase from Cenkos and Cenkos will sell to the Company, on-market, such number of Shares as Cenkos shall purchase pursuant to the Tender Offer, at an aggregate price equal to the amount paid by Cenkos for the Exit Shares. In acquiring Exit Shares pursuant to valid tenders made in the Tender Offer and in selling such Exit Shares to the Company, Cenkos will act as principal (and not as agent, nominee or trustee).

The Put/Call Option Agreement, which is stated not to create a relationship of agency between Cenkos and the Company, is governed by and construed in accordance with English Law.

The Company will also be liable to pay the fees, costs and expenses of Cenkos under the terms of the engagement of Cenkos by the Company in connection with the Tender Offer.

9.   General  Meeting and Resolutions

Under the CA 2006, the Company will require authority from Shareholders to purchase Shares under the Tender Offer and to enter into the Loan Agreements. The Notice of General Meeting to seek such authority is set out in Part IX of the Circular.

The General Meeting will take place at the offices of Cenkos at 6-8 Tokenhouse Yard, London EC2R 7AS at 10 a.m. on 26 May 2023. At the General Meeting, the Resolutions set out in Part IX of the Circular will be proposed to Shareholders.

Resolutions 1-3 (inclusive) are ordinary resolutions and will be passed if more than 50% of the votes cast (in person or by proxy) at the General Meeting are in favour of each resolution. Resolution 4 is a special resolution and will be passed if 75% or more of the votes cast (in person or by proxy) at the General Meeting are in favour of it.

The Resolutions are summarised below:

Resolution 1- this is an ordinary resolution to approve the DM Loan.

Resolution 2- this is an ordinary resolution to approve the DW Loan.

Resolution 3- this is an ordinary resolution to approve the MH Loan.

Resolution 4- this special resolution seeks to confer authority for market purchases by the Company of up to 282,953,968 Shares. This number represents 65% of the Voting Share Capital after taking into account the buy backs of the Shares from Rodney Findley, Kenneth Musen and Alasdair Ritchie and the impact on the issued share capital if all options granted pursuant to the Share Option Scheme have vested and become exercisable at a price of 2.5p per Share and are exercised (resulting in an additional 40,800,344 Shares being issued) prior to the Record Date.

10. Action to be taken in respect of the Tender Offer

The procedure for tendering your Shares depends on whether your Shares are held in certificated form or uncertificated form and is summarised below.

(a)  Shares held in certificated form

Eligible Shareholders who hold Shares in certificated form and who wish to tender any or all of their Basic Entitlement should complete the enclosed Tender Form in accordance with the instructions printed thereon and in Part VI of the Circular and return it by post or by hand (during normal business hours only) to the Receiving Agent, Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD.   A pre-paid envelope is enclosed for this purpose for holders in the UK only. Shareholders who hold their Shares in certificated form should also return their share certificate(s) and/or other document(s) of title in respect of the Shares tendered.  Tender Forms and share certificate(s) and/or other document(s) of title must be received by the Receiving Agent as soon as possible but in any event by no later than 1 p.m. on 2 June 2023.

(b)  Shares held in uncertificated form

Eligible Shareholders who hold their Shares in uncertificated form in CREST and who wish to tender any or all of their Basic Entitlement should tender electronically through CREST so that the TTE Instruction settles by no later than 1 p.m. on 2 June 2023.  Further details of the procedures for tendering and settlement are set out in Part VI of the Circular.

Eligible Shareholders who do not wish to sell any Shares under the Tender Offer do not need to take any action, either in relation to the Tender Form or the sending of a TTE Instruction.

Eligible Shareholders are reminded that the Tender Offer is not being made to certain Overseas Shareholders.

If you have any questions about the procedure for tendering Shares or if you want help in completing and returning the Tender Form, please call Neville Registrars Limited on 0121 585 1131.  Calls are charged at the standard geographic rate and will vary by provider.  Calls outside the United Kingdom will be charged at the applicable international rate.   The helpline is open between 9 a.m. - 5 p.m., Monday to Friday excluding public holidays in England and Wales.   Please note that Neville Registrars Limited cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

Your attention is also drawn to the further information set out in Parts V to VIII of the Circular.

11. Action to be taken in respect of the General Meeting

Shareholders will find a Form of Proxy enclosed with the Circular for use at the General Meeting. Whether or not you intend to be present at the General Meeting, you are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible. To be valid, completed Forms of Proxy must be received by the Company's Registrars, Neville Registrars Limited, by not later than 10 a.m. on 24 May 2023, or 48 hours (excluding any part of a day that is not a Business Day) before any adjourned General Meeting. Completion of the Form of Proxy will not preclude you from attending the meeting and voting in person if you so wish.

12.     Related party transactions

The intentions and undertakings to participate in the Tender Offer by all the Directors, is deemed to constitute a related party transaction under AIM Rule 13. As all the Directors are participating in the Tender Offer, Cenkos, the Company's nominated adviser, confirms that it considers that the terms of the transaction are fair and reasonable insofar as Shareholders are concerned.

In addition, the Loans are deemed to constitute a related party transaction under AIM Rule 13 due to Martin Higginson, David Marks and Daniel Wortley being directors of the Company. The independent directors comprising Nicholas Lee and Sir Robin Miller consider that, having consulted with the Company's nominated adviser, Cenkos, the terms of the Loans are fair and reasonable insofar as Shareholders are concerned.

13. Recommendation

The Board unanimously recommends Eligible Shareholders to vote in favour of the On-Market Buy Back Resolution to be proposed at the General Meeting, as they intend to do in respect of their own Basic Entitlements of beneficial holdings of Shares, representing approximately 15.12 per cent. of the Voting Share Capital after taking into account the buy backs of the Shares from Rodney Findley, Kenneth Musen and Alasdair Ritchie and the impact on the issued share capital if all options granted pursuant to the Share Option Scheme have vested and become exercisable at a price of 2.5p per Share and are exercised (resulting in an additional 40,800,344 Shares being issued) prior to the Record Date.

The Directors can make no recommendations to Eligible Shareholders in relation to participation in the Tender Offer. However, Eligible Shareholders should note that the Directors who hold Shares intend to tender such amount that will ensure that their percentage holding in the Company's issued share capital will not increase following the Tender Offer

Whether or not Eligible Shareholders decide to tender all or any of their Shares will depend on, among other things, their view of the Company's prospects and their own individual circumstances, including their tax position. The value of Shares may following the Tender Offer be higher or lower than the Tender Price.

If you need advice in relation to the Tender Offer, you should consult an independent financial adviser, authorised under the Financial Services and Markets Act 2000, without delay.

The Board, including the independent directors comprising Nicholas Lee and Sir Robin Miller, unanimously recommends Shareholders to vote in favour of the Loan Resolutions (with David Marks, Daniel Wortley and Martin Higginson abstaining from recommending Shareholders to vote in favour with regard to their own Loan Agreements) to be proposed at the General Meeting, as they intend to do in respect of their own aggregate beneficial holdings of Shares. The independent directors comprising Nicholas Lee and Sir Robin Miller represent approximately 0.14 per cent. of the Voting Share Capital after taking into account the buy backs of the Shares from Rodney Findley, Kenneth Musen and Alasdair Ritchie and the impact on the issued share capital if all options granted pursuant to the Share Option Scheme have vested and become exercisable at a price of 2.5p per Share and are exercised (resulting in an additional 40,800,344 Shares being issued) prior to the Record Date.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

DEFINITIONS

The following definitions apply throughout the Circular and the accompanying Form of Proxy unless the context otherwise requires: